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I mostly agree with all your points. The only way it's going to happen is when enough people stop paying for it.

But the providers will probably find a different solution.

Yes, prices are going up, but the real bone of contention is the price of sports. The rest is livable. You may see an adjustment in sports tiers or a consolidation (heck Fox is already buying its way to merging split markets) that could make prices insane or calm down. Right now, the splintering is the biggest problem. Look at the LA market. Throw in PAC 12 with that and you almost have a channel per team. Drives the cost to the consumer up.

Yes, prices are going up, but the real bone of contention is the price of sports. The rest is livable. You may see an adjustment in sports tiers or a consolidation (heck Fox is already buying its way to merging split markets) that could make prices insane or calm down. Right now, the splintering is the biggest problem. Look at the LA market. Throw in PAC 12 with that and you almost have a channel per team. Drives the cost to the consumer up.

With FOX about to compete with ESPN as they launch their FOX Sports One network, I only see prices going up. They need content so they will overbid to get it. They are offering $500 million right now for the Catholic schools that are breaking off from the Big East. Crazy.

With FOX about to compete with ESPN as they launch their FOX Sports One network, I only see prices going up. They need content so they will overbid to get it. They are offering $500 million right now for the Catholic schools that are breaking off from the Big East. Crazy.

That is where the bubble is. None of the hoopla about a la carte is about TVLand. It is espn and the RSNs. And maybe Fox.

Yes, prices are going up, but the real bone of contention is the price of sports.

The bone of contention is the placement of sports. The fallout will be that they will continue to cost more and the providers will eventually have to take some of the burden off the subscribers that don't live or die by sports and make the subscribers that cost the most pay their fair share rather than continuing to subsidize them and their many receivers. For DIRECTV and their old business model, this would have been a catastrophe.

They need to step carefully as the pressure to get PAC-12 and other sports nets increases.

Too often we enjoy the comfort of opinion without the discomfort of thought. -- JFK

If a la carte made sense from a financial perspective, it would be done. It's really that simple. People want unique content, good series, good movies, etc and that costs money. There are many losers that don't make it past pilot or after series one, yet those shows cost a lot of money to make.

I honestly think some people think every show is a hit and guaranteed. If that were the case, it would be much easier argument to make, but of course that isn't the case. Content creation costs a TON of money, fortunately or unfortunately, it is simply reality.

The sports option you are suggesting would be great, but I don't see that happening. They have tremendous leverage even if only 40% of the people are watching those channels. If a provider doesn't have ESPN, they are going to lose massive numbers of subscribers. Because of the leverage of ESPN, they are going to demand 85% to 90% penetration, so the mini-bundle idea is dead before it gets off the ground.

what about a sports only pack + say the big channels like tnt / tbs that some time show big sports events.

I mostly agree with all your points. The only way it's going to happen is when enough people stop paying for it.

Cost to the customer is only one part of the equation. Customers might gripe, but if they only gripe that's not going to change anything. And model isn't going to change until they do more than gripe. And they won't do more than gripe until theres alternative content sources and there won't be alternative continent sources until they do more than gripe. Circular. Chicken and egg.

What young people do today has a way of changing when they have jobs and kids. Predicting trends based of what 16 - 24 year olds do right this second is silly. When I was that age I watched very little tv - I was out doing things. And I wasn't alone in that. By that articles rationale TV should have died off when people of my generation gained a greater degree of social control. But it didn't die - because people change their behaviors as they get older.

"Adults ages 25 to 34, for instance, watched about four and a half fewer hours of television in the third quarter of 2011 than at the same time in 2010 — the equivalent of about nine minutes a day. Viewers ages 12 to 17 also watched about nine fewer minutes a day. The demographic in between, those ages 18 to 24, watched about six fewer minutes a day."

Cost to the customer is only one part of the equation. Customers might gripe, but if they only gripe that's not going to change anything. And model isn't going to change until they do more than gripe. And they won't do more than gripe until theres alternative content sources and there won't be alternative continent sources until they do more than gripe. Circular. Chicken and egg.

Exactly. That's why I said it won't change until customers stop paying for content. The only thing that will change the current model is when the $$$ stop flowing to the programmers.

Depends on your perspective whether digital distribution of music is viable. Many artists claim they make very little from the sale of their music digitally. So basically you want what's good for you.

That's what they used to say about the old model too. Who got most the $? The distributors and retailers.

If it weren't for people willing to pay for entertainment they wouldn't have a job. They create a product like anyone else and that product has a value - set by a complicated set of conflicting interests. When the consumer's view of the value changes then so be it. That's the way the world works.

This is all really just a microcosm of a much bigger problem with the entire economic system. The game is about prying as much money out of the consumer as is possible. If you can manipulate long enough you can build a system that sustains disproportionate reward. Rarely the "system" becomes so bloated and obvious that it fails under it's own abuses. Then they cry relentlessly when there is a challenge to their gravy train.

By the way, ever wonder why it's cheaper to go to Best Buy and purchase the entire CD album yet that same album on iTUNES costs more. Hmm. Despite there being no case to create, no CD to create, etc...yet it's still cheaper than the digital download.

That's what happens to the loser in a competitive market. If CD profit was the only reason BB spent that floor space you can bet CDs would be gone - they help get bodies into the store. It won't be long until CD/DVD/BluRay is gone from BB.

Apparently it doesn't cost me anything extra to go to BB. No extra time or gas or wear on my vehicle.

So we can buy more product for less money at BB. Explain why this business model has plummeted and nearly died.

The answer is explosively obvious - people don't want to pay for crap they don't want. They only want a few songs off of most albums and the album price for those songs is too high (ie. bundling fails).

If the artists want to make more money again, and I'm certain this will happen, then different songs on the same album will have different value. The dogs will be cheap and the hits will cost more. Let's say 2 out of 8 songs on an album are popular. They can double the price of those 2 songs and they will still cost 50% of the old album cost. Then end result is that albums really will be gone for good.

I honestly think some people think every show is a hit and guaranteed. If that were the case, it would be much easier argument to make, but of course that isn't the case. Content creation costs a TON of money, fortunately or unfortunately, it is simply reality.

Perhaps content creation costs too much. I suspect too many overpaid middleman. You don't see the big expensive actors in too many losers.

The average person watches a very small percentage of what is broadcast. Cut the channels and programs by 75% and increase the quality of the remaining stuff by 50% and most people will not only be just as happy but probably happier.

I find it hard to believe that all the ad revenue they get on those piles of weak channels with weak programs somehow subsidizes my viewing. People who buy ads aren't stupid - they pay only what they deem the slot to be worth and for much of that stuff it isn't worth much. People buying ads are "business" people too - they aren't getting suckered more than consumers.

Perhaps content creation costs too much. I suspect too many overpaid middleman. You don't see the big expensive actors in too many losers...

Perhaps, but those "big expensive actors" were once small inexpensive actors that performed in programs of questionable quality but made an impression. A perfect example is the medical dramas St Elsewhere (which, among other then unknowns, featured a young Denzel Washington) and E.R. (which launched the careers of George Clooney and Juliana Margolies). Neither of those shows were sure fire hits (and while E.R. did very well, St. Elsewhere lasted 6 seasons, won a number of awards, but was never a huge hit).

Just be careful what you wish for...al a carte pricing would have a huge and far reaching effects on the basic fabric of broadcast entertainment - with no real evidence that the difference would be an improvement.

That's what they used to say about the old model too. Who got most the $? The distributors and retailers.

If it weren't for people willing to pay for entertainment they wouldn't have a job. They create a product like anyone else and that product has a value - set by a complicated set of conflicting interests. When the consumer's view of the value changes then so be it. That's the way the world works.

This is all really just a microcosm of a much bigger problem with the entire economic system. The game is about prying as much money out of the consumer as is possible. If you can manipulate long enough you can build a system that sustains disproportionate reward. Rarely the "system" becomes so bloated and obvious that it fails under it's own abuses. Then they cry relentlessly when there is a challenge to their gravy train.

In a nutshell that is the root of all these discussions.

Or they just stop producing the product because its no longer worth their time. How does that benefit anyone? I think your mistake is thinking that consumers have all the power. It would be nice if that were the case - but I don't personally believe that to be true. Your arguments are just a little too utopian for me.

So you are saying basically that consumers have decided it costs too much. But where's the proof if that? There is nothing in subscriber or revenue numbers that bear this out. In fact what you are actually seeing is that even in a time of great economic distress - many customers view pay tv as good value and a must have service despite the availability of other services. Directv as an example has added net subscribers this year. As it has nearly every year. Yes subscribers have also grown for Netflix etc but not at the expense of most video services as you would expect if this was really happening - meaning its a companion service for most not a replacement.

So where is the evidence that consumers have spoken? I'm supposed to take message boards filled with people who aren't exactly unbiased as proof of a great paradigm shift?

I'm certain all the same arguments were presented about the music paradigm in 2001.

Look how sweet the money was before 2001 (the small dip 2000-2001 about the same as 1996-1997).

If the "TV" industry wasn't rapidly putting out internet-oriented extensions to their services I might believe that there is no cliff ahead. Unlike the music industry they have the benefit of a historical lesson. No doubt that is why they resist supplying their content to Apple for example.

Note how the book industry may have saved themselves - not by fighting the trend but by making it their own. Apple does book sales yet nothing like the success of music. Amazon and B&N were there right at the start with their own devices and their own estore. There is no Windows in our house - we are almost all Macs (except for server) - yet my wife and son, both big readers, use B&N for books (iPad & Nook).

I suspect that the "TV" industry will eventually see the writing on the wall and will adapt themselves.

SHO/HBO/MAX costs ~$504/yr. Those 7 series we watch are all on Vudu for a season total of $211 (full 1080p format); granted they are a few seasons behind. So 504-211=$293/yr for movies. @ $6 each that's ~48 movies a year or around 1 a week. We watch about that many movies but many are not worth $6. Vudu has all the same movies for the same price (and less for lower resolution).

That leaves over $100/mo for essentially junk content and the privilege of leasing a DVR.

In ~18 months I expect the next version of Channel Master TV to be available with the (apparent) kinks worked out.

What is DTV doing to keep customers like me? Nada. In fact they go out of their way to milk me ($10/mo for HD ).

Of course nearly everybody has different viewing habits. For many it will still make sense to stay with sat/cable. As prices continue to rise, and the average joe's income continues to not, more and more people are going to do these kinds of calculations.

I'm certain all the same arguments were presented about the music paradigm in 2001.

Look how sweet the money was before 2001 (the small dip 2000-2001 about the same as 1996-1997).

If the "TV" industry wasn't rapidly putting out internet-oriented extensions to their services I might believe that there is no cliff ahead. Unlike the music industry they have the benefit of a historical lesson. No doubt that is why they resist supplying their content to Apple for example.

Note how the book industry may have saved themselves - not by fighting the trend but by making it their own. Apple does book sales yet nothing like the success of music. Amazon and B&N were there right at the start with their own devices and their own estore. There is no Windows in our house - we are almost all Macs (except for server) - yet my wife and son, both big readers, use B&N for books (iPad & Nook).

I suspect that the "TV" industry will eventually see the writing on the wall and will adapt themselves.

Big difference between where the music industry was and where the video industry is. The music industry was getting decimated by piracy and was on life support when Apple came knocking. Video not anywhere near that shabby a state and has learned its lessons in minimizing it's piracy risks. I'll agree with you if that consumers start to move in mass, then the industry will shift. But not before then. And i see nothing in the tea leaves that suggests such a consumer shift is imminent.

Barnes and Noble is a bad example of "success" in on-demand electronic delivery. They are struggling to make any money at all, let alone money selling Nooks and the associated eBooks.

They are still in business. If they had followed the retail record store model they would have been gone years ago. They are not selling devices because people want iPads which also have a Nook app. They will probably go out of business. It's inevitable due to the retail stores.

My wife and son are big time readers. They almost never go into the store. They could care less where they buy their ebooks from - Amazon or iTunes or whatever. They will hardly notice if B&N goes.

It's harsh but it's reality.

That REAL Death of Music Industry post shows an overall decline in music revenue. Maybe that is coming to books as well. Just like music was, books are too expensive.

Will B&N going under do anything to reduce the production of books? Nope. They are just a distribution channel - just like DTV.

Success can come in many forms but I think people are too worried about the business-persons view of success. Power and gas companies would be the last to claim that kind of success yet they are still here making money and consumers are still getting all the services they have always had. The computer industry is a more tech example - times are tough as valuation of products declines rapidly but does any consumer feel they have lost anything?

Of course nearly everybody has different viewing habits. For many it will still make sense to stay with sat/cable. As prices continue to rise, and the average joe's income continues to not, more and more people are going to do these kinds of calculations.

I can agree that services like these (Channel Master TV, Vudu, etc) will be around and have a place for a certain type of niche customer. Where we disagree is just how big these alternative services are going to get, and why.

From my perspective, if there was ever a time for people to do those cost/benefit calculations - it would have been during the last 3 or 4 years when much of this country was gripped by the worst economy in our lifetimes. But they didnt. You didn't see a massive shift from Pay TV to a cord cut model, a la carte model. In fact, what you saw - as i noted earlier - was a net subscriber increase for many companies - like Directv. If what you are saying is as true as you think it is, we should have seen the opposite. If customers aren't going to do those calculations at a time like that, what makes you think that they're going to do them when things are actually good again?

Success can come in many forms but I think people are too worried about the business-persons view of success.

It's not that we're too worried about the business's perspective, it's that many of us recognize that "the customer is always right" is an intensely outdated concept and doesn't pay enough attention to the wholistic view of why things are the way they are and how current realities influence future change.

From my perspective, if there was ever a time for people to do those cost/benefit calculations - it would have been during the last 3 or 4 years when much of this country was gripped by the worst economy in our lifetimes. But they didnt. You didn't see a massive shift from Pay TV to a cord cut model, a la carte model. In fact, what you saw - as i noted earlier - was a net subscriber increase for many companies - like Directv. If what you are saying is as true as you think it is, we should have seen the opposite. If customers aren't going to do those calculations at a time like that, what makes you think that they're going to do them when things are actually good again?

I have no data on this but here is a thought to consider...

TV is but one thing in the entertainment pantheon. Lots of other things are far more expensive - pro sports tickets, live concert tickets, movie tickets, vacation trips, bars & restaurants, etc, etc, etc. Perhaps people have cut back on those and spent a portion of the savings for TV.

We recently did the same kind of cost evaluation for our cell phones. For our usage pattern (even with iPhones) we are saving a huge amount of money by going to the prepaid model (Airvoice Wireless). For us the only difference is one minor irritation ($0 popups every 20 minutes or so when cell data is on) so we turn cell data on and off as we need it. Rather not have that irritation but it isn't worth ~$100/mo to get rid of it. Even if I was getting a 5% increase in income every year I don't think I'd go back.

Taking the whole population into consideration... I agree that most will not bother to look in detail. Many people still go to BestBuy. Here in BB HQ country it seems we have a store every 5 miles. They are in trouble too. Another business doomed.

In the big picture it's a herd mentality. A critical mass is all that is required to massively change direction. Time will tell for TV.

It's not that we're too worried about the business's perspective, it's that many of us recognize that "the customer is always right" is an intensely outdated concept and doesn't pay enough attention to the wholistic view of why things are the way they are and how current realities influence future change.

Actually, having been an engineer in a Fortune 500 software company, I can emphatically agree that "the customer is always right" is often very wrong. For the most part companies are tactical and that mentality rules. The end result is rushing to build products that customers think they want (or Product Managers believe they want) that are of low quality. It consumes an enormous amount of resources and produces little of value. Might make some customers happy in the short term but it never lasts. It takes away most investment in real innovation. (The stock value and revenue for that company have been flat for 7 years.) There are a few exceptions. Apple is one. Apple would not exist today if they followed that typical approach.

Conversely, the customer is always wrong (the company is always right) is likewise a recipe for failure. The last decade has seen a lot of industry crashes.

There needs to be a balance and for "TV" it's getting out of balance.

The only reason a la carte is a warm topic is because of the costs. They need to address that and offer reasonable alternatives. I would be perfectly fine with staying with DTV if I could get the cost under control - i.e. value for what I get.